Capita suffers a £106m loss to a ransomware attack, plans to cut costs across the board

British outsourcing company Capita has reported a loss of £106.6 million due to a significant cyber security incident it suffered last year.

 

In March last year, Capita experienced a ransomware attack that affected employees’ access to internal Microsoft Office 365 applications. The issue was first spotted on March 31 when employees faced technical issues and were not able to log in as they kept getting a “password incorrect” prompt during the login process. The company immediately launched an investigation to understand the nature of the technical issue.

 

The infamous Black Basta group later claimed responsibility for the cyber attack and listed Capita as a victim on its data leak site. The threat group also posted samples of data allegedly stolen from the company and threatened to sell the database to the highest bidder.

 

Information stolen by the hacker group included phone numbers, home addresses, details of more than 100 bank accounts, and sensitive personal data belonging to individuals who applied for jobs at schools.

 

Capita later said that it expected to incur a loss of up to £20 million due to the cyber incident. The expenses included costs incurred on specialist professional fees, recovery and remediation costs, and investment to reinforce the company’s cyber security environment.

 

For calendar year 2023, in its annual results, Capita reported a net loss of £106.6 million as a result of the cyber attack. This immediately took its market capitalisation down by 20 percent. The company attributed the remainder of its losses to high costs, including business exits and goodwill gestures.

 

According to the report, Capita’s net promoter score, a customer experience metric, dropped from +26 to +16 as a result of dissatisfaction expressed by individuals mostly associated with the company’s pensions administration business.

 

In a statement shared with the media, Capita’s new CEO Adolfo Hernandez said that the company is planning to cut costs in the coming year with the aim to save the business an additional £100 million by mid-2025 ($127.2 million).

 

“Our 2023 financial results have demonstrated some progress. However, we have yet to deliver the operational excellence that will enable us to create the right platform for future growth or achieve our full potential for the benefit of shareholders.

 

“Looking forward, we will focus on precision in execution, co-creating solutions with clients and accelerating the use of technology, and leveraging our technology partnerships to drive improvement in our operating and financial performance,” he said.

 

“We need to deliver a rapid reduction in our cost base and are on track to deliver the net £60 million annualised cost savings, from Q1 2024 as announced in November. Today we are announcing further material efficiency improvements of £100 million to improve our competitive position.

 

“We have strong foundations and the opportunity for significant growth in the medium and longer term. I look forward to sharing more details on Capita’s future strategy in June,” Hernandez added.

 

The company is yet to share details on how it plans to reduce the costs, but it can be assumed that the company will limit its number of employees, as it has done in the past months.